by Elizabeth Hines | Jul 31, 2013 | Blog
Earlier this month I wrote a post for EBN about how to manage your company and clients when the classic 80/20 rule applies. That is, when a small number clients generate 80 percent (or more) of your revenue. In the post, I made the recommendation to manage clients who are not a good fit with your model out of your portfolio. Several people responded to the post asking how to go about doing this. Here’s how.
Once you have determined that a client is not a good fit with your model, manage them out. Managing a client out of your portfolio is tough, tricky, and essential for you and for your client. If your client isn’t the right fit with your model, then you will not be able to provide your client with the best service. This is the crux of the issue. You, as a company, need to do the best job possible for your client. If the client doesn’t fit your model, you are not doing a good service by keeping the client in your portfolio.
Saying good-bye
Begin by doing a thorough audit of your relationship with the client. Identify why the client doesn’t fit your company’s model. That is, pin-point the disconnect between your client’s needs and what your company offers. As you do this exercise, look at the relationship with your client over time. Have you grown apart as your businesses have changes/grown? Has the relationship never been a good fit? It is important to drill down and truly assess the relationship. Document everything.
Next, set up a meeting or a call with the client – breaking up over text or email is unacceptable. Begin the conversation with honesty and tell the client that you believe they could receive better service and better value if they worked with a company that better fit their model. If possible, provide the client with names of companies that would be a better fit.
Talk with the client about putting together a transition plan. Let the client know that the relationship isn’t over immediately and that the lines of communication will always be open. Alleviate fears that the transition will be difficult.
It is vital that when you talk with the client, you talk about your client’s needs and focus on these. For example, look at the difference between these two approaches:
#1: You tell your client: “Your business is a niche company not only in terms of product offering but also in terms of location. I have really enjoyed working with you and watching your company grow. Because I value you as a client, I believe you would be better served by a company that is well-positioned in the Atlanta metro area and really knows the model car industry. We just aren’t that company, and I feel we are holding you back.”
#2: You tell your client: “Your business isn’t right for my company. We don’t have the time or people to devote to your needs. Our model and yours doesn’t match, we need to recognize this and move on.”
Approach #1 shows your client you understand their needs and that you value the relationship.
Breaking up is hard to do, but if you do it right you will likely receive a call down the road from the client thanking you for breaking up with them.
by Elizabeth Hines | Mar 14, 2013 | Blog
I read an article in the New York Times Dealbook section by Stephen Davidoff titled, “For Private Equity, Fewer Deals in Leaner Times.” The article has a lot of interesting information on the changing times in the private equity markets. The author lists the primary forces driving this turbulence.
Too few “good” merger and acquisition opportunities are being seen. “Deals” are greatly overpriced. There are fewer sellers in the market, and the ones that are making themselves available are being snatched up by strategic buyers (those from the industry, and not financial buyers), who can drive offer prices higher, leaving them with little or no margin. But what swung my head around the most was that the private equity industry’s biggest problem is having too much money to invest.
You read that correctly — too much money to invest. To be clear, Davidoff does an excellent job of articulating the state of private equity and the hurdles that are changing that industry. Nevertheless, when I read the phrase “too much money to invest,” it got me thinking about the high-tech aftermarket services industry and how underserved it has been from a private equity standpoint.
Having worked for a private equity-owned high-tech aftermarket services business and now as an adviser to that space, I see plenty of really good platform companies (ones that can be built upon) with strong footholds in service or geographic niches that truly make them unique (read: “valuable”). What they lack are the funds and guidance that a responsible and possibly patient private equity firm can offer. The recent historic activity would make you think it is an active marketplace, but aside from a few high-profile transactions and the most recent Blue Raven deal with Leading Ridge Capital Partners, LLC, the activity is spotty at best.
Not only do these platform companies in the high-tech aftermarket services space make for attractive investments, but it seems to me that the financials in these “niche companies” are there to support private equity interest, as well. These businesses typically have gross margins in the 35-40 percent range and net margins that are really attractive when compared with the overall high-tech space.
Combining or rolling up companies with expertise in adjacent service and/or geographic areas into a “newco” with broader reach and a deeper service offering will surely deliver financial results that private equity would consider better than not investing. That said, I know I am taking some liberties in describing the process and its complexity, but I do so to make a point. The high-tech aftermarket services space is a fractionalized marketplace with accomplished participants, quality customers, and better than traditional financials when compared with the overall industry averages. To this, I say, “Hey, private equity guys, look over here.”
by Elizabeth Hines | Mar 4, 2013 | Blog
The bring-your-own-device (BYOD) revolution in the workplace has thrown a curve ball to those responsible for safeguarding your company’s data. Your colleagues are now accessing corporate data from their own computer, a tablet, even their mobile phone. Although the corporate finance groups are singing the praises of the trend, due to its inherent reduction in costs, it’s not all rosy in the BYOD world. It’s crucial to format a corporate strategy policy that will be inline with your goals.
Here’s why: With so many of us bringing more and more smart devices inside our office environments and hooking them to our corporate networks, the potential for data leakage grows exponentially. Combine that with the tablet revolution and the mobile/remote employee trends, and it adds up to a potentially dangerous data-leak train wreck. Technology is now mobile.
In a study conducted by the University of Glasgow, 63 percent of used smart devices purchased through eBay, other online marketplaces, and in second-hand stores, still had data on them. This data included personal information as well as sensitive business information. We can only imagine the increase in sensitive data leaks when you include the road-warrior’s best and newest smart device as they trade in for the next best thing.
The problem is there’s no chain of custody in the BYOD world. Think about it. When the corporations owned your cellphone and your PC or laptop, they controlled its issue to you, how you used it, what software you put on it, and when and how it was turned in and destroyed. A solid internal tracking of electronic assets coupled with a solid electronic asset disposal solution provider meant that, for the most part, the corporate crown jewels were safe.
In the BYOD world, the corporation does not own the IT equipment. Personal smart devices are being hooked up to corporate IT environments. This mating of personal and professional equipment and data is happening everywhere. Your corporate data is being commingled with secure and non-secure access points to the Web, cloud, etc. Not to mention the fact that those devices metaphorically walk in and out of your office every day, and you have no control.
Unfortunately, there is no easy answer to this problem. I have seen it addressed via software solutions at the enterprise level (think Blancco or BlackBerry enterprise), at the device level (think solutions like Apple Find My Device, etc.), and at the human resources and legal levels with policies and procedures that prohibit users’ use of corporate information. But the truth is, without a chain of custody model incorporated with these other solutions, once the corporate data is accessed or downloaded, it’s already gone — you just don’t know it yet.
The reality is that it’s going to take some time for the corporate world to catch up with what I like to call the “semi-private information revolution” like the cloud, Facebook, or social media. Secure file sharing, essential for an organization’s BYOD guidelines, is one of your best options. Services are now available to help with cloud encryption and it’s changing the way we share and monitor files. Encrypting data is crucial and minimizes the risk of sharing sensitive data and having it tampered with. And rely on your electronic asset disposal provider to help develop a strategy and process that is aligned with your corporate information sharing guidelines. Right now, your corporate data is only as safe as the process that you create.
by Elizabeth Hines | Jan 31, 2013 | Blog
The role of strategic selling in an organization is one of the toughest and most difficult. It is also one of the most expensive line items in any company’s financials. In my role as a strategic advisor, I get to see a lot of sales teams and their go-to market skills. There are a lot of great strategic sales teams out there, but there’s an equal amount of selling teams that could use some advice.
Here are five ways to optimize your strategic sales teams and, in turn, increase their revenue producing effectiveness.
- Make no mistake, the strategies listed above are not easy to instill in a sales organization. By doing so, your true opportunities will increase, they will have greater value, and your chances of success will increase. No hard work goes unrewarded. Strategic selling is a process. Like any process, discipline and milestones mark the way. Only through uniform use, iteration, and formal improvement will your organization, the sales team, and the salesperson become more effective. I don’t care what the process looks like…yet. Get a process that everyone can track inside your organization and stick to it. No loose cannons or end around players….they devalue the process.
- Your strategic selling process must include the following characteristics:
- Assessing the selling opportunity
- Developing a competitive strategy
- Identifying the key decision makers and their motives/agendas
- An action plan
- Sales plan testing and improvement
- An organization implementation process (it takes a village to raise a child…it takes an aligned organization to sell your solution)
- Create a compelling event inside your target customer. If your sales process relies solely on responding to RFPs, you are not strategically selling….you are responding to opportunities that every qualified organization will see and compete for. The easiest sale is the one that your competitors never knew about in the first place. Creating a sense of urgency and need inside a customer is hard work and takes time, but that’s what makes it valuable to your client and your organization. Knowing your customers’ needs and how your solution fits makes you more valuable than a traditional “RFP responder”. Be there first, be relevant, and be action oriented and your customers will rely on your solutions more often.
- Time is money and both are scarce resources. Make the most of these precious resources and never fall in love with an opportunity unless it meets the following criteria. If it fits, engage fully and engage to win. No half efforts. Ask yourself these questions:
- Is there a true opportunity that has been clearly identified and agreed to within your customer’s organization? Said another way, is there a “compelling event” as mentioned above that everyone involved is aligned around?
- Can you compete to win? Does your solution or unique business differentiator align to produce customer benefit? Can it be aligned?
- Can you win? Are there any commercial obstacles that would stand in the way to your winning? These can be politically driven, relationship driven, or even solution driven.
- Is the opportunity worth winning? Does it have the desired ROI for the investment of selling resources? Does it contain enough profit to engage your organization? Is it too risky a fit (a force fit to your solution) or does the risk and reward balance? Can your customer pay for the service? Have they allocated funds?
- Stay away from “free trials” or “free pilot” engagements. In fact, run from them. If your customer is headed down that path, revisit number 4 above. It could be that they do not completely understand your solution and how it fits, or simply that they have no funds to undertake the engagement. In either case, time is money and it’s time to move on.
by Elizabeth Hines | Jan 15, 2013 | Blog
If you are the CEO of your company, a business unit manager, or an executive tasked with developing your company’s strategic plan, it’s likely that you have learned that from time to time you need to rely on an expert to help tackle the business problems that can “make or break” your year or your career.
Savvy executives understand that not all business challenges can be resolved from inside your organization and are not afraid of the phrase “not invented here”. They rely on external experts or strategic advisors to know their internal business, know the external marketplace, and have the domain expertise to combine this knowledge into strategies that will work for today and the long term.
Why Use a Strategic Advisor?
- If you have ever thought about getting some help from the “outside” but weren’t sure of the value it would create for you and your organization, here are some benefits that should make your decision really easy. Strategic Advisors fill the “holes” in an organization that exist in a particular discipline, experience level, or accumulated knowledge base. As a result, they can speed decision making, time to market, or cost reductions with proven solutions and without the pain of trial and error.
- Strategic Advisors offer a viewpoint based on facts and real experiences; not on politics or prejudice. The advice they can offer is “agenda free”. Yes, the truth sometimes hurts, but savvy leaders know that the intellectual honesty that a strategic advisor brings drives innovation and growth.
- Strategic Advisors know when to stretch the targets. Whether cost reduction, sales growth or both. They have the experience to know when to step on the gas and when to apply the brakes…without driving you off the road. Their external expertise can put you and your team in a position to be successful for the short and long term.
- Strategic Advisors are always “up to speed”. They have a niche, know it well, and spend time and resources keeping abreast of the trends and the companies driving those trends. This “multiplier-effect” cannot be duplicated internally without a significant addition to headcount and expense.
- Strategic Advisors are extremely cost effective. They allow you to buy the highest level of experience, personal network and know-how, applied to your toughest challenges, for just the right amount of time.
Combining the best from inside your organization with the brightest from the outside is a winning formula. Smart business leaders solve this equation time and time again and reap the benefits listed above.
Interested in using a strategic advisor? For more information contact Fronetics here.
